The Best and Worst States to Buy a Home in 2024
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Home ownership is everyone's dream. But in the current economic conditions, it will remain just that for several people — a dream. According to Zillow, home affordability has hit a 15-year low amid soaring home prices and mortgage rates in America, however, we will see an improvement in terms of inventory and home prices as we enter 2024. Both Zillow and Redfin highlight that your mortgage rates will remain high. Economic conditions have made owning a home neither easy nor affordable.
People looking to buy a home in the current hot market are now looking elsewhere to deploy that money. This pullback in demand, Zillow says, has decelerated price growth and resulted in a slowdown in sales. With high mortgage rates, prices will be slow to fall and this will make renting cheaper.
Even if you do end up owning a home, insurance costs and property taxes may force you to second-guess your decision. Here are tips and insights to where it pays to wait and where it's safe to buy.
In this article
Tips before you buy
Don't become house poor
House poor is someone who spends a large portion of their income on homeownership, leaving little for other necessary expenses. Because don't forget: buying a home comes with recurring expenses like maintenance, property tax, and insurance costs. Before you pull the trigger on your home, ask yourself a few questions: Do I really need a home right now, and can I comfortably make monthly payments? Buying a home when you can't afford is typically a precursor to other bad financial events. For example, you may exhaust your savings in a bid to remain current on your payments, you may need to take on more debt, and you'll likely have to delay your retirement.
Calculate the full cost
There are several online calculators you can use to calculate the full cost of a home. As noted, you also have to factor mortgage payments and other housing costs like insurance into your calculations. All of this does add up, and if you haven't done the math, you may be taken aback by the costs involved in buying a home. So, do your homework and see how much down payment you'll need, what do closing costs look like, and how much property tax you can expect. All of this information is easily available online.
Engage a financial adviser
Buying a home is a major milestone for everyone, so you have to be sure you do everything right and that nothing is overlooked, especially your finances. A financial adviser will help you see the full picture: what your financial situation looks like, what your credit score is and whether you can afford a home or not. If your finances don't allow you to buy a home, the financial adviser can even work out strategies that'll put you on the path to homeownership.
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Five best states to buy a home in 2024
For references, the best states to buy a home in 2023 were West Virginia, Mississippi, Ohio, and Kentucky. Even amid the doom and gloom, these are the best states for homeowners in 2024.
Buffalo, New York
As compared to several other regions, Buffalo has shown stability in home prices. Zillow believes it is going to be the hottest real estate market for the year. It also remains at the top for the number of jobs created as compared to the number of new home construction projects being approved. While it is not one of the cheapest states for a first-time homebuyer, the home value in Buffalo increased by 5% between 2022 and 2023 and they are expected to remain steady throughout the year.
Cincinnati, Ohio
According to Zillow, Cincinnati has a high market velocity. Homes here were sold within five to six days in the last year and this shows the high demand for properties. Cincinnati offers high quality of life with a range of educational institutions that attract families. It also has a rich history and a vibrant cultural scene, making it a top choice for many.
Columbus, Ohio
The capital city of Ohio, Columbus has seen steady growth driven by the tech segment and educational institutions, which has attracted several families. Two Ohio cities are in the top five states to buy a home, making it a top choice for investors. This could also be due to its strategic location and the availability of several facilities.
Indianapolis, Indiana
Indianapolis attracts homebuyers due to its location. It is known for an affordable cost of living and a thriving job market. The median sale price in Indianapolis is lower than $300,000 but it requires an annual income of $81,794 to afford a house here. The market is known for a wide range of options, right from condos to suburban properties.
Providence, Rhode Island
Rounding out our top-five picks is the Providence, Rhode Island. It is the perfect blend of a small town and a modern city with all the amenities. The market has seen a steady growth in the housing prices driven by cultural and academic presence. With a median home price over $400,000, Providence continues to attract home buyers.
Five worst states to buy a home in 2024
In 2023, the worst states to buy a home included Hawaii, California, Washington, Colorado and Utah. Let’s take a look at this year’s worst states.
New York
New Yorkers have a median household income of over $74,580, and the inventory is rising as home owners are waiting for the market to improve before they sell. The financial capital isn't the best place to own a home for several reasons. The cost of living is high, unemployment rate is high and so are the property taxes. This has posed affordability challenges to many home buyers.
Minneapolis, Minnesota
Minneapolis is the second worst place to buy a home this year. The home prices are up 7.6% as compared to 2022 and the median price is $321,000. Due to the tight inventory, the median sale prices keep increasing. Even the rental rates are high here, adding to the overall cost of living.
Houston, Texas
Houston saw a 3.2% rise in home prices in 2023 as compared to 2022 and its median price is $325,000. The home prices are expected to rise throughout the year, making it difficult for investors to enter the market. An average home is sold within 42 days in the market. While the average cost of living is relatively low, owning a home can still be tough.
San Antonio, Texas
Due to the high interest environment, San Antonio has seen a drop in the real estate prices. It has seen rapid population growth lately and Realtor.com predicts that the real estate in San Antonio will continue to see a decline this year too. However, it is not the best place to live within a budget.
New Orleans, Louisiana
Home value in New Orleans has declined over the year and it is expected to have the coolest real estate market this year. It has seen the sharpest drop amongst the 50 cities listed and Zillow expects home values to drop by another 6% this year with a drop in the owner occupied households.
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Things to do after you've bought a home
Find the right insurance
Once you've bought a home, the first order of business should protect it from any disasters. When choosing homeowners insurance, you should have a large deductible if you can afford it. This helps bring down your premium. The right type of insurance helps bring down your cost. Make sure you read the policy thoroughly before signing, and if something doesn't make sense, you should ask questions.
Set aside money for repairs
Having an emergency fund is a great idea. This ensures your finances do not take a hit when disaster strikes. You could set aside money monthly in a high-yield savings account through an automatic deposit. You should ensure that this money is spent only for its intended purpose. You wouldn't wanna have a leaky roof or an air conditioner that needs replacing, only to realize you blew the money on something else.
Budget
Any budgeting you did before owning a home doesn't apply now. After you purchase a house, you'll have to factor in utility costs, insurance, mortgage payments, and any maintenance and repairs. These costs should be taken into your account in your new budget. Moving from renting to owning a home can be a wake-up call once you have to pay for repairs and maintenance out of pocket. But if you've done the math, these costs won't come as a surprise.
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FAQs
Will home prices drop in 2024?
Home prices have continued to accelerate for most of 2023. However, amid recent economic data and expectation of an interest rate cut, the home prices could drop later in the year.
Will mortgage rates stay low throughout 2024?
It’s hard to predict what will happen to mortgage rates in the U.S., with so many factors in play. However, there is expectation that the mortgage rates will fall mid-year.
When is the best time to buy a home in 2024?
Historically, late summer to early fall is an ideal time for homebuyers to find the best selection of homes at low prices. Late fall through winter tends to showcase less housing inventory, while spring and early summer tend to have the highest home prices.
The bottom line
Homeownership is not a one-and-done deal. Even after you buy a home, there are recurring costs that you'll be responsible for, but we hope our ranking of best states and the worst housing markets will help you make the right decision. Buying real estate, and a home specifically, is the American dream. But most homebuyers don't work out the numbers fully and only realize they've become house poor when it's too late. Instead, ask yourself if you really need a house and run the numbers to see if you can even afford one.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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